DAC7 FAQs document published by Tax Authorities on practical aspects of reporting obligation for digital platforms

Background

To comply with the reporting requirements as a result of the implementation of the DAC7 regulation, reporting platform operators are required to collect specific information on sellers using their digital platform. One year ago, theMinistry of Finance published guidance on the collection and verification requirements of platform operators by means of a Policy Notice. This Notice entered into force on 1 January 2023 (read our alert on this Notice here). It also contains an explanatory memorandum on the interpretation and application of the requirements.

In addition to this Notice the Ministry of Finance have published a FAQs document. The document contains answers given by the Ministry on questions:

• related to the reporting obligation for digital platforms,
  
• where (in which country) to report
• the activities that are relevant
• the collection and verification of data,
• the reporting process, and
• formal aspects
• the ways to contact the DAC7 desk of the Tax Authorities

Most of the answers could already be found in the explanatory notes during the implementation process (in Dutch: ‘parlementaire geschiedenis’) and the Policy Notice. However, some answers are new. Below we have highlighted the most important points of the FAQs document.

Reporting obligation

To the question what the platform operator needs to report in case the consideration deviates from the amount paid to the seller on the platform, the Ministry answers that a reporting platform operator is obliged to provide the information he reports to the Tax Authorities, also in a summary to his sellers. If sellers notice inaccuracies in the overview provided by the platform operator, sellers can contact the platform operator. Sellers can include the information from the received overview when doing their tax return. If it turns out that their income differs from the amount the platform has previously reported, sellers themselves need to include the correct amount of income in their return. It is important that the Tax Authorities at least know via the platform operator that a seller has received income via a platform, and also approximately how much that income amounts to.

Where to report?

In case a platform operator is based in the EU, the sellers are EU residents and the real estate they let through the platform is located outside the EU, this constitutes a relevant activity that should be reported because the sellers are residents in the EU. The fact that it concerns real estate outside the EU is not relevant for the reporting obligations of the platform operator. This answer is quite surprising since in the Policy Notice and the explanatory notes multiple time reference was made to real estate located in an EU Member State.

Goods

The term goods refers to all tangible property in accordance with the VAT Directive for its interpretation. As a result, the sale of intangible assets or goods, such as music, film, software, energy rights or vouchers, does not fall under the definition of goods. But there are exceptions to this.

Vouchers

The trade in vouchers - in whatever form - does not fall under relevant activities. Nevertheless, a seller can receive a voucher as payment for a relevant activity. As a result, the voucher may be part of a DAC7 report at the time of issue or redemption as consideration. The terms Single Purpose Voucher and Multiple Purpose Voucher seem to follow the VAT Directive.

Energy

Energy itself - contrary to energy rights - is seen as a tangible property, again in accordance with the VAT Directive.

Data collection and verification

No postponement of the reporting obligations, as we have seen in Germany, has been announced. The deadline to report therefore remains 31 January 2024. Corrections can be made on reports accepted by the Tax Authorities before 1 February 2024 until 30 June 2024.

Penalties

Finally, more explanation has been given on penalties. When it is due to intent or gross negligence of the platform operator that reporting is not, not timely, not complete or not correctly done, a fine may be imposed, with a maximum amount of € 1,030,000. However, the penalty should be proportional and in proportion to the severity of the offense. It is also possible that in serious cases criminal prosecution will be initiated.

Finally

If you have any questions regarding the above, please contact your tax advisor.